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The Securities and Exchange Commission settled aiding and abetting charges with one of Enron’s former top finance executives. The charges were linked to the infamous Nigerian barge deal with Merrill Lynch.

Under the plea deal, Jeffrey McMahon, Enron’s former treasurer and chief financial officer agreed to pay $300,000 in disgorgement and prejudgment interest and to a five-year bar from acting as an officer or director of a public company. He also agreed to be suspended from appearing or practicing before the SEC as an accountant, with a right to reapply after three years.

The SEC complaint alleges that McMahon participated in a fraudulent transaction involving the “sale” of an interest in floating power plants (the barges) to Merrill Lynch. The sale of the barges, which were docked in Nigeria, reportedly allowed Enron to improperly report $12 million in earnings in the fourth quarter of 1999.

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The SEC asserts that Enron never should have recorded profits from this purported sale because risk associated with true ownership in the barges was never transferred to Merrill Lynch. According to the SEC, McMahon and others made an oral side agreement with Merrill Lynch so Enron allegedly would retain the financial risk.

The complaint also alleges that while serving as Enron’s treasurer from April 1998 through March 2000, McMahon made false and misleading statements to the national credit rating agencies regarding Enron’s financial position and cash flow. The SEC charged that the suspect statements related to Enron’s cash flow from operations that failed to disclose that a portion of the cash flow was a result of structured financings and debt-like obligations that had nothing to do with Enron’s operations or trading business.

In addition, the SEC claims that McMahon made additional false and misleading statements to the rating agencies after he became Enron’s CFO in October 2001. McMahon remained Enron’s finance chief through the company’s bankruptcy filing in December 2001. McMahon has never been criminally charged with any wrongdoing in the collapse of Enron. However, he was one among a number of defendants in a massive shareholder lawsuit.

Officials at credit-rating agencies have testified he was among the Enron executives who purposely misled them as far back as 1999, reported the Houston Chronicle. The paper also pointed out that witnesses in the Enron barge trial testified that McMahon made illicit oral promises to Merrill Lynch bankers that if they’d temporarily buy some power-plant barges from Enron, the company would get them out of the deal within six months at a profit.

Aiding and abetting suits have become something of a controversy of late. Under Section 20(e) of the Securities Exchange Act, the SEC has the right to go after aiders and abettors. But in 1994, the Supreme Court ruled in Central Bank of Denver v. First Interstate Bank of Denver that Congress did not intend that secondary actors be held responsible in private suits for “aiding and abetting” the securities fraud of a primary violator, under the Securities Exchange Act and its Rule 10b-5.

What’s more, when Congress passed the Private Securities Litigation Reform Act of 1995, it did not prescribe civil causes of action for aiding and abetting under Rule 10b-5.